Opioid industry takes New York to court over new levy

The state wants to raise $600 million from drugmakers and distributors to fight the opioid crisis

Getty Images

Some opioid companies say a New York law makes it prohibitively expensive for them to operate in the state.

By

SaraRandazzo

Opioid makers and distributors are fighting a novel New York state law that aims to collect hundreds of millions of dollars from the industry to help defray costs of the opioid crisis, with some companies re-engineering their supply chain to avoid the new tax.

Companies and trade groups have argued in three legal challenges filed in recent months that the law, which seeks $600 million over six years, is unconstitutional. They point to a lawsuit New York’s attorney general has already filed against major opioid industry players to recoup money for the state, and say the tax is an improper end-run around resolution of that case.

New York’s health department sent bills last week to 75 companies and their subsidiaries detailing how much they owe under the new Opioid Stewardship Act. The state said the charges are based on the volume and potency of drugs each company sold or distributed in New York. The first charge retroactively covers 2017.

Companies hit with the charge say they recognize the seriousness of the crisis, which has led to widespread addiction and public-health costs. But they say taxing companies for legal drug distribution isn’t the solution.

The state’s health department disclosed the names of affected companies but not the amounts each owe, citing trade secrets. The list includes well-known names like CVS Health
CVS, +0.53%
, Endo International PLC
ENDP, -2.78%
, Purdue Pharma LP and Teva Pharmaceutical Industries Ltd
TEVA, -1.54%
alongside dozens of small companies based around the country.

Intraday Data provided by SIX Financial Information and subject to terms of use. Historical and current end-of-day data provided by SIX Financial Information. All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only. Intraday data delayed at least 15 minutes or per exchange requirements.